In 2007, Congress passed a law to phase in greater efficiency standards for light-bulbs from 2012 through 2014. Those standards ultimately require the 5 billion incandescent bulbs across the US be replaced with new ones, which Cramer said is a $50 billion market. The switch presents a "huge opportunity" for firms that make solid-state light emitting diodes, he said. Where lighting accounts for approximately 14% of energy consumption in the US, Cramer said LED technology could consumption by 30%. Cramer noted that there several federal and state programs are helping facilitate the switch from incandescent to LED.

Cree is the dominant player in the LED business, Cramer said. The Durham, N.C.-based company produces chips used in LED lights, in addition to other higher value components, fixtures and actual LED lights, too. Cramer said the stock was hammered Thursday after a newspaper article reported that some Taiwanese LED producers are receiving fewer orders, but he thinks the article is wrong. Some investors, he added, think Cree only offers LED products to backlight computer screens and so on, but Cramer said backlighting represents less than 25% of their business. Half of its business, Cramer said, comes from general purpose lighting and that's why he likes this stock.

Cramer noted that the technology company has achieved gross margins, meaning the percentage of every dollar of sales that it keeps as profit. Cree's gross margins are 1,700 to 2,200 basis points or 17 to 22 percentage points higher than its competition thanks to its superior technology and efficiency, he said. While prices for LED lights have gone down, the company has still been able to increase margins by lower costs and boosting sales volumes---trends he thinks will continue.

In the last 12 months, shares of Cree are up 117% from $32.39. While the stock is trading at 22 times next year’s earnings, it has a 22% growth rate and with the ongoing LED lighting trend, Cramer thinks that's "pretty cheap."

Investors interested in more of a speculative play should consider Power Integrations , Cramer said. Based in San Jose, Calif., this company makes high-voltage semiconductors that are used in power-efficient energy conversion. The chips are used in everything from home appliances to cell phone chargers and it also has LED lighting exposure that continues to grow, he said. At this time, the company has 300 LED lighting customers and has engaged in design activity with more than 1,000. The company reported a "terrific" quarter Monday with gross margins of 52.2% that were up 50.5% the previous quarter.

"With companies looking to save money on energy costs, the LED lighting biz is in the sweet spot," Cramer said. "An industry that has government support, but doesn’t need it."